Are taxes and duties going up?

Bucharest is looking for solutions to reduce the budget deficit

Daniela Budu, 28.05.2025, 14:00

Immediately after his election victory, President-elect Nicușor Dan stated that his immediate priority was to reduce Romania’s budget deficit, in order to avoid a drop in the country’s rating and a loss of investor confidence. He also stressed that he did not want to increase taxes and that he preferred measures to improve fiscal efficiency and reduce spending. Now, the Ministry of Finance announces that, in the first four months of 2025, the difference between revenues and expenditures was 55 billion lei (about 11 billion euros), generating a budget deficit of 2.95%. Therefore, by the end of the year, Romania should reduce the deficit by at least 30 billion lei (6 billion euros), in order not to lose important European funds, and the deficit at the end of 2025 should be 7% of the GDP.

At Tuesday’s meeting with President Nicușor Dan, Finance Minister Tanczos Barna presented the budget and the budget execution for 2025, as well as the measures already taken to reduce spending and ensure fiscal consolidation. He said that Romania needed a government with full powers in the shortest possible time, which would carry forward the fiscal recovery measures. He believes that the deficit targets assumed will be achieved only through firm measures, reducing spending and creating a more flexible state. ‘The budget execution in the first four months of the year shows that ensuring the sources of income to maintain the investment pace and pay the salaries and pensions increased last year represents a huge challenge’ – believes Tanczos Barna. However, he added, the figures demonstrate that Romania has an economy capable of generating substantial income, even in a period marked by challenges. According to the official, however, a firmer commitment is needed to achieve a sustainable balance between revenue and spending.

For his part, the president of the Fiscal Council, Daniel Dăianu, believes that the budget deficit is ‘like a gangrene for the body of the Romanian economy and society’ and it is an illusion that its correction can only be made on the expenditure side, noting that some tax and duty increases cannot be avoided.

Daniel Dăianu: “Those who support the idea that the deficit correction can only be done on the expenditure side are chasing a chimera. Such a thing is not possible. I believe that we cannot avoid increasing the state’s fiscal revenues through some increases in taxes and duties.”

We recall that Romania ended last year with the largest budget deficit in the European Union – 9.3% – and has been in an excessive deficit procedure since 2020. (MI)